Cheating doesn't pay and some people never learn are two thoughts that come to mind when reading the following story. The New York Times reports today on the $76.5 million that Staten Island University Hospital has agreed to pay in settlement of fraud claims that Attorney General Eliot Spitzer had been investigating against the hospital. He will not be bringing criminal prosecutions against the hospital executives. According to the Times,

This is the second time in seven years that the hospital, the largest on Staten Island, has been investigated and fined for improperly billing Medicaid, the state's health care program for the poor. In September 1999, the hospital agreed to repay New York Medicaid $45 million and provide $39 million in free care for indigent patients, for bills it had improperly submitted in a separate scheme.

But even as that settlement was being negotiated, the hospital's executives were knowingly embarking on a new plan to profit illegally from Medicaid, according to a criminal complaint against the hospital to be released today by Attorney General Eliot L. Spitzer's office. And though the hospital's own lawyers warned the executives to stop, the illegal billing continued unabated, the complaint says.

Hospital executives and lawyers also repeatedly lied to State Department of Health regulators, as well as investigators in the Medicaid Fraud Control Unit in the state attorney general's office, trying to cover up the scheme, the complaint says.

"The magnitude and the depth of this fraud, and the willingness of the leadership there to tolerate it, was unusual," Mr. Spitzer said yesterday in an interview.

The entire article is an interesting read - if I turned these facts into an exam question, my students would not believe it. Thanks to Jim Tomaszewski for the update. [bm]